For Filipino families who rely on overseas remittances, an uncertain job market for migrants due to the COVID-19 threatens to cut one of their main sources of cash, the Asian Development Bank said.
Remittances to Asia this year could fall by 11.5% to 19.8% in a worst-case scenario as the pandemic forces global layoffs, Manila-based ADB said in a report. Remittances to the Philippines could drop by as much as 20%, it said.
Money sent home by OFWs helps drive consumption in the economy, meaning cash to spend for groceries, bills and tuition. In 2019, total cash remittances totalled $28.9 billion (P1.42 trillion), that's roughly half of the P3.7 trillion national budget for that year.
The pandemic hit hard in sectors that employ mostly migrant workers like hospitality and construction, the ADB said. Unlike other crises wherein OFWs are encouraged to remit more, they couldn't do so if their employers were also affected, the ADB said. When the strongest typhoon on record, Yolanda (Haiyan), devastated the Visayas in November 2013, the months that followed saw higher remittances to fund the rebuilding of houses.
"Remittances to Asia and the Pacific, amounting to $315 billion in 2019, are an important and stable source of income for families back home and help strengthen external financing—alongside foreign direct investment and tourism receipts—in many developing
economies," the ADB said.
"Globally, jobs and worker welfare are severely affected by the pandemic. But some sectors are hurt more than others... Migrant and informal workers are among those facing the most severe impacts, as they often do not have regular contracts nor strong bargaining power," it said.
The uncertainty of the global economic recovery makes migrant workers vulnerable, the ADB said. Last week, the Philippines reported a 16.5% drop in gross domestic product in the April to June quarter, officially sinking the economy into a recession.